Crunchyroll, Inc. v. Admiral

CRUNCHYROLL, INC., et al., Plaintiffs, v. ARIA ADMIRAL, et al., Defendants.

Case No. 11-cv-02334-JCS

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

February 10, 2014

REPORT AND RECOMMENDATION RE MOTION FOR DEFAULT JUDGMENT

Dkt. No. 79

I. INTRODUCTION

This is a copyright infringement action. Plaintiffs Crunchyroll, Inc. ("Crunchyroll") and TV TOKYO, Inc. ("TV Tokyo") allege that Defendants Daniel Pledge, Aria Admiral, Moe Ahmad and William Barrera have unlawfully copied and uploaded anime videos onto YouTube, LLC ("YouTube") in violation of Plaintiffs' exclusive distribution rights and copyright. None of the Defendants have filed an answer or otherwise responded to this action. The Clerk has entered default as to each Defendant.

Plaintiffs filed a Motion for Default Judgment ("Motion"). A hearing was held, at which the undersigned identified a number of issues for Plaintiffs to address through supplemental briefing and evidence, including the lack of evidence supporting Plaintiffs' request for damages.¹The supplemental materials submitted by Plaintiffs address most of the issues identified at the hearing, but Plaintiffs still fail to support their request for damages with evidence. Accordingly, it is recommended that the Motion for Default Judgment be GRANTED in part and DENIED in part.

II. BACKGROUND

A. Factual Allegations

1. Plaintiffs' Creation and Distribution of Anime

Plaintiffs in this action are Crunchyroll and TV Tokyo. TV Tokyo is a Japanese company and is the world's leading broadcaster and distributor of anime video. Second Amended Complaint ("SAC") ¶ 9; Affidavit of James Lin ("Lin Decl.") ¶ 3. Anime refers to animated movies or television programs originating in Japan. Second Amended Complaint ("SAC") ¶ 16. "Anime" is an abbreviated pronunciation in Japanese of "animation." Id.

The subject matter of this action is Anime products that are created in Japan in the form of television serials, and distributed by TV Tokyo under the following series titles: Naruto, Naruto Shippuden and Bleach (collectively, the "Anime Serials"). Id. ¶ 17; Lin Decl. ¶ 4. TV Tokyo owns the copyright for each of these Anime Serials. Second Affidavit of James Lin ("Supp. Lin Decl.") ¶ 4. Each of these Anime Serials consists of numerous television shows (each an "Anime Episode"). Id. Each Anime Episode is first broadcast and publically displayed in Japan by TV Tokyo. SAC ¶ 25.

Crunchyroll, a California corporation with headquarters in San Francisco, is the operator of Crunchyroll.com, which distributes, via internet streaming, Anime television programs worldwide outside of Japan. SAC ¶ 9; Lin Decl. ¶ 2. Crunchyroll provides a streaming video service that allows viewing of Anime Serials to subscribers, and after a period of time, to non-subscribers through ad-supported streaming. SAC ¶ 18; Supp. Lin Decl. ¶ 7. Under licensing agreements with TV Tokyo, Crunchyroll makes the Anime Episodes available for video streaming withinhours of the time that they are first broadcast in Japan. Id. When TV Tokyo broadcasts the Anime Serials in Japan, the voiceovers are in Japanese. Id. ¶ 5. Crunchyroll translates the voiceovers into English. Id. ¶ 8.

After the first television broadcast screening of each new Anime Episode in Japan, Crunchyroll has a seven day exclusive right to stream the Anime Episodes in certain parts of the world, including the United States. SAC ¶ 19; Lin Decl. ¶ 6. The exclusive seven-day period is known as the "On Demand Window." SAC ¶ 21; Lin Decl. ¶ 6. No other company has the right to stream Anime Episodes during this seven-day period. Supp. Lin Decl. ¶ 9. During the On Demand Window, Crunchyroll offers the new Anime Episode to subscribers who pay a subscription fee to Crunchyroll for Anime content in the amount of $6.95 per month, or for all content in the amount of $11.95 per month. Lin Decl. ¶ 6.

After the On Demand Window, Anime Episodes are available online from Crunchyroll, either in a subscription format or in the form of ad-supported streaming which is free to the consumer. SAC ¶ 21; Lin Decl. ¶ 7. After the On Demand Window, a second United States company, Hulu, has a licensing agreement with Viz Anime (a licensee of TV Tokyo) to stream Anime Episodes. Supp. Lin Decl. ¶ 12. Plaintiffs state that once Hulu is allowed to stream Anime Episodes, Hulu captures approximately 39% of the market share, and Crunchyroll keeps 61% of the market share. Id. ¶ 13.

2. Defendants' Alleged Infringement

Plaintiffs allege that each Defendant, using a self-selected "user name," has without the permission or consent of Plaintiffs, published and/or distributed Anime Episodes for which Plaintiffs had exclusive rights by posting the downloaded content on the online media distribution system provided through YouTube.² SAC ¶¶ 23-24; Supp. Lin. Decl. ¶ 9. As a result, Defendants have made it possible for other persons to obtain and view the public performance of the listed Anime Episodes without reviewing them on the Crunchyroll website by subscription or within Crunchyroll's ad-supported environment. Lin Decl. ¶ 8.

Plaintiffs state that the Anime Episodes were all uploaded to YouTube during Crunchyroll's seven-day exclusivity period and posted on YouTube in English. Supp. Lin Decl. ¶¶ 17-18. Plaintiffs state that Defendants either downloaded the Anime Episodes from Crunchyroll's website, or from Japanese TV broadcast and used English subtitles originating from Crunchyroll's website. Id. ¶ 20. Crunchyroll is the only official source for English language Anime Episodes during the time the first videos appeared on YouTube. Id. ¶ 19.

3. YouTube's Take-Down Notices & Counter-Notifications

Plaintiffs provided YouTube with a notice to take down each Anime Episode from YouTube's website. SAC ¶ 32; Lin Decl. ¶ 10. YouTube removed the various Anime Episodes, and then notified the persons who uploaded the Anime Episodes of their statutory right under 17 U.S.C. § 512 to provide a "counter-notification" if the removal was due to a mistake or misidentification of the material. Id. ¶ 33; Lin Decl. ¶ 10. Each of the four Defendants in this action provided a counter-notification, which required Plaintiffs to file this lawsuit in order to keep the infringing content from being reposted to YouTube. Lin Decl. ¶ 11.

In the counter-notifications, each Defendant stated in writing: "I swear, under the penalty of perjury, that I have a good faith belief the material was removed due to a mistake or misidentification of the material to be removed or disabled." SAC ¶ 35. Plaintiffs alleged that the counter-notifications were false and fraudulent and that each of the Defendants understood that he or she had no ownership of and no permission to use any of the Anime Episodes. Id. ¶ 36. Plaintiffs allege that the counter-notifications constitute an admission that the Defendants were engaged in copyright infringement. Id. ¶ 37.

YouTube's take-down notices and Defendants counter-notifications were sent and received by email. Id. ¶ 34. Plaintiffs allege that the Defendants' response to YouTube's emails verified that the email addresses provided by the Defendants to YouTube actually belong to Defendants. Id. In the counter-notification, Defendants were required, under 17 U.S.C. § 512(g)(3)(D), to provide his or her actual name, address and phone number. SAC ¶ 35. Defendants provided fictitious contact information. Lin Decl. ¶ 12.

B. Identifying the Defendants, Service & Entry of Default

Plaintiffs initially filed this action on March 11, 2011 against several individual defendants. See Dkt. No. 1. Plaintiffs discovered information regarding Defendants' identities through service of subpoenas on Google, which owns YouTube. In the subpoena, Plaintiffs sought the identity of Defendants through the Internet Service Provider ("ISP") Defendants used in connection with their YouTube accounts. Id.

Google's disclosures identified the email addresses, names and addresses for three of the four Defendants in this lawsuit: Aria Admiral, William Barrera, and Moe Ahmad. Lin Dec. ¶ 13-15 and Ex. A. The address of Defendant Ahmad is 1818 South George Mason Drive, Arlington, Virginia. Lin Decl. Ex. A. The address of Defendant Admiral is 825 Locust Avenue, Apartment 103, Long Beach, California. Id. The address of Defendant Barrera is 926 Locust Avenue, Apartment 209, Long Beach, California. Id.

These three Defendants were served with the First Amended Complaint.³ Dkt. Nos. 19-21 (Proof of Service). Defendant Barrera was served by personal service at his address. Dkt. No. 20. Defendant Admiral was served via email in compliance with this Court's order dated August 16, 2011. Dkt. Nos. 14, 21. Plaintiffs state that Defendant Ahmad was served by substituted service—the service processer served the summons and other relevant documents on Kelly Anna Maria Magan, a resident of 7003 Larrlyn Dr., Springfield, VA 22151. The Clerk entered default as to Defendant Ahmad and Defendant Barrera on September 26, 2011, and as to Defendant Admiral on November 14, 2011. Dkt. Nos. 23, 29 (Entries of Default).

The fourth Defendant in this action is Daniel Pledge. Defendant Pledge used the pseudonym "Basil Hawkins" in connection with acts alleged in the Second Amended Complaint. See Lin Decl. ¶ 14. At the outset of this litigation, "Basil Hawkins" was uploading videos to YouTube through his various YouTube accounts titled BleachEpisodesSubbed, NarutoDubEpisodes, ShippudenDubEpisodes, and EdenOfTh3East. Id. ¶ 15. Because of multiplecomplaints regarding illegal uploading, those accounts were terminated by YouTube (the "Terminated Accounts"). Id. ¶ 16. Plaintiffs state that due to Pledge's use of the pseudonym "Hawkins" and the termination of the Hawkins YouTube accounts, they were unable to discover Pledge's identity through the subpoenas initially served on Google.

After the Hawkins YouTube accounts were terminated, Plaintiffs assert that "Hawkins" resumed uploading Crunchyroll material through...